Increasing returns would be a situation where a ﬁrm increases its workforce and other inputs by
A) 8 percent and its output increases by 5 percent.
B) 5 percent and its output increase by 8 percent.
C) 8 percent and its output increases by 8 percent.
D) 12 percent and its output increases by 10 percent.

Question

Quizplus · Accepted Answer

Increasing returns occur when the percentage increase in output is greater than the percentage increase in inputs. In option B, a 5% increase in inputs leads to an 8% increase in output, demonstrating increasing returns.

Increasing Returns Would Be a Situation Where a ﬁRm Increases